12. Indicate below whether the installment sale method of accounting can apply to each of these...

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Accounting

12. Indicate below whether the installment sale methodof accounting can apply to each of these transactions (answer “yes”= installment method possible or “no” = installment method notallowed):
___ Sale of 12-acre tract of land held as inventory by a realestate developer where payment will be received in 2 years.
_ Sale of business equipment where payment is due after yearend.
_ Sale of commercial building subject to seller note (wherepayment is to be received in future years).
_ Sale of single parcel of land held as an investment wherea taxable loss resulted.
___ Sale of building subject to a contingent sales price thatmay not be ultimately received.

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Under the installment sale method the profit on the sale is recognized when the cash from the sale is received It is thus a conservative approach to revenue recognition and is applied only See Answer

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